Request For Proposal - osa.ms.gov Department of Marine... · All information contained within this proposal is proprietary and confidential. The information provided in this proposal

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Original

Request For Proposal

Issued by:

Office of the State Auditor

Jackson, Mississippi

Stepl1anie Palmertree

Director, Financial and Compliance Division

Submitted by:

BKD,LLP

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CPAs & Advisors

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May 11, 2018 Ms. Stephanie Palmertree

Director, Financial and Compliance Division

Mississippi Office of the State Auditor

501 North West Street// Suite 801 Jackson, MS 39201

Re: Mississippi Department of Marine Resources

DEAR MS. PALMERTREE:

190 E, Capitol Street, Suite 500 // Jackson, MS 39201-2190 � 601.948,6700 II fax 601.948.6000 // bkd.com

With a responsibility to independently assess each Mississippi state agency, including the Mississippi Department of Marine Resources, the Mississippi Office of the State Auditor (SAO) stands as an advocate to

protect the trust and resources of the citizens throughout our state. SAO and the Mississippi Department of Marine Resources recognize it is important these agencies demonstrate fiscal responsibility through

accountability of funds. As SAO works to identify qualified outsourced external audit options, you need the

expertise of a reputable, experienced CPA and advisory firm that understands your operations, processes and reporting requirements to help you have confidence in the Mississippi Department of Marine Resources'

-financial statements. With our existing experience working with the SAO and the Mississippi Department ofMarine Resources, BKD, LLP can offer the quality audit needed to help you reinforce your dedication to

economic accountability without needing to first expend time and resources in understanding yourrequirements and processes.

BKD National Governmental Group works with hundreds of governmental clients nationwide. This industry

experience, as well as our involvement with many prominent national and state associations allows us tounderstand the specific issues the public sector faces. In addition, we are committed to helping our clientsstay informed of these issues through frequent articles, webinars, roundtables and other updates, including

opportunities for continued professional education for your staff. This can translate into furtheropportunities for you to be on the forefront of industry change and effectively navigate the ever-changing

governmental regulatory environment.

Our commitment to the SAO and the Mississippi Department of Marine Resources does not end when thefinal audit report is delivered-we want to be the advisor you can count on to remain in touch throughoutthe year, available to help and answer questions when you need us. In addition, we can leverage our stronghistory of serving Mississippi state agencies to share best practices and facilitate a well-coordinated, efficientengagement that does not place undue burden on your personnel. Furthermore, we understand you want to

work with a firm that has audited a number of entities under the Mississippi Accountability System forGovernment information and Collaboration (MAGIC). Several BKD professionals have worked in the MAGIC

system and can apply this knowledge to provide you timely audit services while limiting disruptions to your

daily operations.

The SAO is an important client for BKD, and we place great value on extending our working relationship with

you while continuing to maintain our independence. We believe our proposal will help you select our firmfor timely, efficient and objective services delivered by experienced professionals. We will call you soon toanswer questions you may have about this proposal, or you may reach us at 601.948.6700 or by email as

provided below.

Sincerely,

.--:--/ � 3------

Timothy T. Burns, CPA Partner [email protected]

Wilkins M. Crawford Jr., CPA Director [email protected]

PraxitY.': MEMBER•'

GLOBAL ALLIANCE OF INDEPENDENT FIAMS

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RFP RESPONSE .............................................................. 1

Firm Qualifications , ...................................................................... 1

Tax I.D. Number ................................ : ........................................... 3

Independence .......... ; .............. _ ...... _ ............ ................................... 4

Peer Review ..................................... ,., ...... , ............................... , ...... 4

Your Investment .......................................................................... 4

APPENDIX ....................................................................... 6

Future Negotiations ....................................... -... -.. -............ -............ 7

AICPA Peer Review Letter ........................................................... 8

BKD Peer Review Report .............................................................. 9

Your BKD Engagement Management Team .............................. 10

Service Description ................................................... , .................. 13

BKD PRIDE Values ........................................................................ 16

CPAs & Advisors

Dur acceptance of this engagement is subject to completion of our normal client acceptance procedures, Upon

acceptance, the actual terms of our engagement will be documented in a separate letter to be signed by you and us

All information contained within this proposal is proprietary and confidential. The information provided in this

proposal is intended for informational purposes only and may not be copied, used or modified, in whole or in part,

without BKD's prior written approval All information in this proposal is as of May 31J

2017J

unless otherwise noted.

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RFP RESPONSE

For the convenience of Mississippi Depai1ment of Marine Resources and the Mississippi Office of the State Auditor (SAO), BKD, LLP has structured our proposal according to the requirements in SAO's Request for Proposal (RFP). We believe our proposal will demonstrate our qualifications to serve the Mississippi Department of Marine Resources and SAO.

FIRM QUALi FiCA TIONS

1. A description of the Firm's qualifications for performing professional auditing services.

2. The length of time the Firm has been performing such services. A listing of previous governmental audits completed

should be included in the proposal.

GOVERNMENTAL ACCOUNTING EXPERTISE

BKD National Governmental Group works with approximately 500 governmental clients nationwide, including federal and state agencies, municipalities, counties, public utilities, airports and transportation authorities. Our advisors can help Mississippi Department of Marine Resources address the numerous financial considerations of governmental entities, including fiscal accountability and resource management, as well as performance management, budgeting and debt administration.

As part of our commitment to remaining at the forefront of the public sector, leaders across our national governmental practice created the BKD Center of Excellence for Government. This group of professionals meets regularly to discuss impo1tant developments, legislative updates and challenges affecting governmental entities similar to Mississippi Department of Marine Resources.

In addition, our public sector involvement has enabled us to establish connections with m1merous regulatory and auditing organizations, including:

•• American Institute ofCPAs (AlCPA) Governmental Audit Quality Center, as a member

•• Government Finance Officers Association

•• Governmental Accounting Standards Board (GASB)

•• Office of Management and Budget (0MB)

•• U.S. Government Accountability Office

Governmental Audit Quality Center

We look forward to communicating best practices and forward-looking strategies to help Mississippi Department of Marine Resources thoughtfully consider the areas impm1ant to fulfilling your fiduciary responsibilities.

KNOWLEDGE OF GASB REQUIREMENTS

BKD offers a team of professionals that can bring expertise in the application of GASB accounting and repo1ting requirements relevant to your industry. Your proposed engagement team will include professionals who routinely work with clients who follow GASB standards.

We will work closely with you in evaluating the effect of pending GASB pronouncements on Mississippi Department of Marine Resources. We strive to address these matters well in advance so you have adequate time to prepare for and apply the pronouncements. Our audit approach is based on understanding the requirements of the standards, understanding your application of the requirements and evaluating the results. We commit to a continued dialogue with you on significant pronouncements both prior to and during the implementation process.

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SIGNIFICANT SINGLE AUDIT EXPERIENCE

According to data compiled by 0MB via the Federal Audit Clearinghouse, BKD is the fifth-largest provider of Single Audits among CPA firms, performing approximately 440 annually. With approximately one-third of our not-for-profit and governmental clients receiving federal funding, we are familiar with the requirements for allowability of both direct and indirect costs, as well as the ability for the recipient to charge an administrative cost allowance under many federal programs.

To help streamline the Single Audit process, we use audit programs and checklists designed specifically for the federal programs we audit. Our firm maintains a database of audit programs tailored to the grants and other federal programs commonly found in governmental entities. Our extensive experience providing compliance testing in

accordance with 0MB requirements can help us properly perform and submit the required Single Audit on time.

A STRONG HISTORY OF PERFORMANCE

BKD has been providing professional audit services since we were founded in 1923,

and has been serving governmental entities since 1970. Because of our past working relationship and knowledge of Mississippi state agencies and their operations, you can have confidence in BKD's understanding of the issues and challenges the SAO and Mississippi Department of Marine Resources face. We are committed to being the service provider you can trust for quality deliverables and unmatched client service. In addition, as previously mentioned, we understand you want to work with a firm that has audited a number of entities under the Mississippi Accountability System for Government Information and Collaboration (MAGIC). Several BKD professionals

have worked in the MAGIC system and can apply this knowledge to providing you timely audit services while limiting disruptions to your day-to-day operations.

If engaged, we will not rely solely on this strong historical performance. Our team remains dedicated to proactively identifying opportunities to offer sound professional advice and help increase the value of your investment.

PROVEN CLIENT EXPERIENCE

REPRESENTATIVE CLIENTS

BKD is proud to work with Mississippi governmental entities, including:

Central Mississippi Planning and Development District

Delta Regional Authority

Hinds County Board of Supervisors

Jackson Convention Complex

Mississippi Affordable College Savings Program

Mississippi Department of Employment Security

Mississippi Department of Information Technology Services

Mississippi Department of Marine Resources

Mississippi Department of Public Safety

Mississippi Department of Transportation

Mississippi Prepaid Affordable College Tuition Program

Mississippi State and School Employees Life and Health Plan

Mississippi State Department of Health

Mississippi Surplus Lines Association

Municipal Energy Agency of Mississippi

Municipal Gas Authority of Mississippi

Office of the Mississippi State Treasurer

BKD

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experience

professionalism

"Having financial statements

completed by the Authority's

statutory deadline is crucial

for us. BKD has met or

exceeded our scheduled

completion date every year

with audit reports that are

timely and professionally

done."

Justin Noll Controller

Colorado Water Resources &

Power Development Authority

Denver, Colorado

"BKD has been a great

resource for the City of

Lincoln in accomplishing our

financial reporting goals.

They have provided us with

prompt and sound technical

and accounting guidance

throughout our affiliation.

The BKD audit teams have

always been professional,

friendly and accessible."

Peggy Tharnish City Controller

City of Lincoln, Nebraska

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State Treasurer of Mississippi - System Restoration Bonds

University of Mississippi Medical Center Educational Building Corporation

BKD also is proud to audit other governmental entities, including:

Arkansas Development Finance Authority Cherokee Nation and Cherokee Nation Entertainment

Choctaw Nation Housing Authority

Choctaw Nation of Oklahoma

Cltl7en Potawatoml Nation

City Utilities of Springfield Colorado Water Resources Development & Power Authority

Denver Health & Hospital Authority

Denver Urban Renewal Authority

Fayetteville Public Library

HoosierFund Indiana Education Savings /\uthority and Upromise Investments, Inc.

Indianapolis Airport Authority

Minneapolis/St. Paul Metropolitan Airports Commission

Nebraska Lottery Pikes Peak Library District

State Universities Retirement System of Illinois

REFERENCES

Our clients are our best ambassadors, and we encourage you to contact them about their satisfaction with our services. The following clients have consented to discussing BK.D's services and service delivery with you at your convenience.

Mississippi State School Employees Life and Health Plan Mr. Richard Self State Insurance Administrator

601.359.5557 Jackson, MS

Mississippi Department of Employment Security Ms. Jackie Turner

Chief Financial Officer 601.321.6346

Jackson, MS

Mississippi State Department of Health Ms. Sharon Dowdy

Chief Financial Officer

601.576. 7354

Jackson, MS

TAX I.D. NUMBER

3. The Firm's tax I.D. number.

Our tax identification number is 44-0160260.

3 experience BKD

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BKD

INDEPENDENCE

4. An affirmative statement that the Firm is independent of MMD as defined by generally accepted auditing standards

generally accepted in the United States of America and Government Auditing Standards.

BKD is independent with respect to SAO and the Mississippi Department of Marine Resources as defined by the Code of Professional Conduct of the AICPA and the United States Government Accountability Office's Government Auditing Standards. We are not aware of any relationship that would impair our independence.

PEER REVIEW

S. A copy of the report of its most recent external quality review, including a statement indicating whether that quality

review included a review of specific government engagements.

BKD is committed to providing quality audit services to our clients. We submit our work to external reviewers, who challenge our approach and findings. We are proud of the findings from these reviews, which indicate that our process works.

Our most recent A[CPA peer review included, among others, engagements performed under Government Auditing Standards. A copy of our most recent peer review report is included in the Appendix.

YOUR INVESTMENT

6. A Schedule of Professional Fees and Expenses.

BKD knows our clients do not like fee surprises. Neither do we. Our goal is to be candid and timely, and we want to answer your questions about fees upfront. We determine our fees by evaluating a number of variables: the complexity of the work, the project's scope, the time we will spend and the level of professional staff needed.

PROPOSED FEES

Mississippi Department of Marine Resources

For the Years Ending June 30 2018 2019

Financial Statement Audit in Accordance with Government Auditing Standards &

Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative

Requirements, Cost Principles, and Audit Requirements for Federal Awards

(Uniform Guidance) $22,600 $23,200

2020

$23,900

The above fees are all-inclusive and include an administrative fee of 4 percent to cover items such as copies, postage and other delivery charges, supplies, technology-related costs, such as computer processing, software licensing, research and library databases, and similar expense items. Our fees may increase if our duties or responsibilities change because of new rules, regulations and accounting or auditing standards. We will consult with you should this happen.

Our estimate of fees does not include any time that may be required to address a restatement of the previously audited financial statements. Accordingly, any such work will be billed based on the following quoted hourly rates.

HOURLY RATES

Any work outside the scope of this engagement will be priced according to our hourly rates.

Staff Levels Partner

Senior Manager, Director

Associate, Senior Associate, Senior Associate II, Manager

Hourly Rates $290-$400

$190-$290

$90-$190

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Unmatched client service isn't

just a slogan at BKD; it's the

backbone of our culture.

Theodore D. Dickman, CPA

Chief Executive Officer I BKD, LLP

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FUTURE NEGOTIATIONS

Upon being selected as the successful bidder, BKD may require modification to the terms and conditions, as referenced in the RFP, to comply with professional standards and/or BKD's policies. As BKD has successfully resolved similar terms and conditions with the SAO previously, BKD is confident the parties can successfully negotiate a mutually acceptable agreement.

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AICPA PEER REVIEW LETTER

'"AICPA)�

October 26, 2017

Theodore Dickman

BKD, LLP

Peer Review Program Administered by !lie National Peer Review Committee

201 N Illinois St Ste 700 Indianapolis, IN 46204 4224

Dear Theodore Dickman:

American Institute of CPAs

220 Leigh Farm Road

Dllrham, NC 27707,8110

It is my pleasure to notify you that on October 26, 2017, the National Peer Review Committee accepted the

report on the most recent System Review of your firm. The due date for your next review is November 30, 2020. This is the date by which all review documents should be completed and submitted to the administering entity.

As you know, the report had a peer review rating of pass. The Committee asked me to convey its

congratulations to the firm.

Thank you for your cooperation and support of the profession's practice-monitoring programs.

Sincerely,

Michael Fawley Chair - National PRC

[email protected] 919-402-4503

National Peer Review Committee

CC: Candace Wright, L Bennett

Firm Number: 900010002800 Review Number: 552103

T: 1 919.402 4502 I F: 1.91 9,402 4876 I nprc@aicpa org

BKD

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BKD PEER REVIEW REPORT

Postlethwaite & Netterville

8550 United Plaza Blvd., Ste. 1001 - Baton Rouge, LA 70809

225-922-4600 Phone - 225-922-4611 Fax - pncpa.com

Postlethwaite & Netterville and Associates, L L C.

Report on !he Firm "s System of Quality Control

To !he Partners of DKD, LLP rnul lhe Natin1rnl Peer Review C:nrnrnittee

We hm•c reviewed the system of quality control for the accounting and auditing practice of BKD, LLP (lhc firm) applicable lo engagements not subject lo PCAOB inspection in effect for the year ended May 31, 20 l i. Our peer review was conducted in accordance with the Standards for Performing mid Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants (Standards),

A summmy of the nahirc. objectives, scope, limitations of, and the procedures perfom1ed in a System Review as described in the Stand11rds nrny be found at ww,,.a1c1>i1 orivprsnmn:lj11)'. The summmy also includes an explanation o[ how cugagcnwnls idcnlificd as no! performed or reported in conformity with applicable professional standurds, if any, are evaluated by a peer reviewer lo determine a peer review rating.

Firm's Responsibility

The firm is responsible for designing a system of quality control and complymg w1lh 1! to provide !he fmn with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material rcspccls. The finn is also responsible for evaluating actions lo promptly rcmcdiatc engagements deemed as not performed or reported in conformity wilh professional standards, when appropriate, and for remedialing weaknesses in ils system of qualily conlrol, if any.

Peer Re\'iewcr's Responsibility

Our responsibilily is lo express mi opinion on the design of !he syslem of qualily control and the firm's compliance lhcrcwilh based on our review,

Required Selections mid Considerations

Engagements selected for review included engagements performed under Government Auditing Standarli.1·, including compliance audits under Single Audit Act; audits of employee benefit plans, audits perfonned under FDICIA, an audit or canying broker-dealers, and examinations of service organizations [SOC I and SOC 2 engagements].

As parl of our peer review, we considered reviews by regulatory enlilics as conununicatcd lo !he firm, if applicable, in delermining the natme and exlent of our procedures.

Opinion

In our opinion, the system of qua lily control for the accounting and auditing practice or BKD, LLP applicable to engagcmenls not subject lo PCAOB inspection in effect for !he year ended May 31, 2017, has been suitably designed and complied with to provide the firm with reasonable assurance of pcrfonning and reporting in conformity with applicable professional standards in all nwteri<1I respects. Firms \:WI I e\:eive a I ati11g of pm.,, pu.,s wi//i

dejiciency(ie.1) or fail BKD, LLP has received a peer review rating of pass.

Baton Rouge, Louisiana October 6. 2017

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BKD

YOUR BKD ENGAGEMENT MANAGEMENT TEAM

The most critical factor in providing high-quality service is choosing your engagement team. We take team selection seriously and have the appropriate team of advisors to meet your needs. The following is a sample of professionals who could be assigned to your engagement team and their anticipated roles.

ENGAGEMENT MANAGEMENT TEAM EXPERIENCE

Timothy T. Burns, CPA Partner Engagement Role: Lead Audit & Engagement Partner

Tim has more than 30 years of experience serving as an auditor and a consultant for a number of

industries, including governmental, not-for-profit, higher education and commercial entities, including telephone companies and other utilities, such as wireless telephone and cable television. His experience includes agency audits under the Mississippi Accountability System for Government Information and Collaboration (MAGIC). His consulting experience in the

utility field includes representation and testimony before various public service commissions on a diversity of ratemaking and other matters, including cost of capital, rate design and development of rate base and revenue requirements. Tim's additional experience includes being in-charge auditor of fieldwork for the audit of several municipal utilities, including Single Audits. Tim serves as the governmental and not-for-profit team leader for the BKD Jackson office.

He is a member of the American Institute of CPAs and the Mississippi Society of Certified Public Accountants.

Tim is a graduate of Mississippi State University, Starkville, with a B.S. degree in accounting.

Wilkins M. Crawford Jr., CPA Director Engagement Role: Audit Director

Wil has more than 10 years of experience providing audit and accounting services to telecommunications, governmental, not-for-profit, higher education and health care clients. Wil also serves as the accounting and auditing assistant director for BK.D's Jackson, Mississippi, office.

He has served as the in-charge, manager and engagement executive for Single Audits under 0MB Circulars for various hospitals, universities, governmental and not-for-profit agencies, as

well as Yellow Book financial statement and Rural Utilities Service compliance audits for telecommunications entities. Within BKD, he has assisted with audit staff training and creating advanced virtual Single Audit compliance training. His experience includes agency audits under the Mississippi Accountability System for Government Information and Collaboration (MAGIC).

Wil is a member of the American Institute ofCPAs and Mississippi Society of Certified Public Accountants (MSCPA). He was awarded the Silas M. Simmons Bronze Medal for the 2007 CPA Exam. He also has served as president of the MSCPA Young CPAs, chair of the MSCPA Governmental A&A Committee, millennial chair of the MSCPA Long Range Planning Committee, an MSCPA board member and was the 2015 winner of the MSCPA Rising Star Award. He is a member of the Association of Government Accountants and a reviewer for the United States and Canada's Government Finance Officers Association's Certificate of Achievement for Excellence in Financial Reporting Program.

He previously served as treasurer on the board of directors of the Central Mississippi Chapter of the Mississippi State University Alumni Association and currently serves on the Madison United Methodist Church finance committee. He currently serves on the board of directors for Habitat for Humanity Mississippi Capital Area.

Wil is a summa cum laude graduate of Mississippi State University with a B.S. degree in accounting and an M.Acc. degree.

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Linda S. Trifone, CPA, CFE Director Engagement Role: Audit Director

A member of BKD National Health Care Group, Linda provides assurance and consulting services for health care providers, with an emphasis in hospitals, nursing homes and physician clinics. She manages Single Audits for not-for-profit, hospital and governmental entities, as well as Yellow Book financial statements audits. Her experience includes agency audits under the Mississippi Accountability System for Government Information and Collaboration (MAGIC). Linda also assists several small cornme1·cic1l c1nrl not-fnr-prnrit diP.nl.1, wilh lhP.ir ;iss11rm1(:e ;ind consulting needs.

She is a Certified fraud Examiner (CfE) with 13 years of public accounting and two years of internal audit experience. She is a OKD national training instructor. Linda is a speaker around the state on fraud, audit and accounting issues and published an article on fraud in the newsletter of the Mississippi Society of Certified Public Accountants (MSCPA).

Linda is a member of the American Institute ofCPAs, MSCPA, Healthcare Financial Management Association (HFMA) and Association of Certified Fraud Examiners. Linda serves as chair of the Health Care Services Committee of the MSCPA. She also is a member of the board of directors of the Mississippi chapter of HFMA.

She is a graduate of University of Notre Dame, South Bend, Indiana, with a B.S. degree in accounting.

Andrew M. Richards, CPA Partner Engagement Role: Concurring Reviewer

Andy is a member ofRKD National Governmental Grour. With arrroximately 20 years of experience at BKD, he provides audit and advisory services to not-for-profit and governmental entities. He also assists BK.D's National Office in providing technical support to BKD auditors, developing firm guidance on governmental accounting standards, reviewing governmental audit engagements, developing professional education on government-related topics and performing internal office inspections. His experience includes agency audits under the Mississippi

Accountability System for Government Information and Collaboration (MAGIC).

He is the audit partner on numerous state and local governments in Arkansas, including Fort Smith, Texarkana, Conway and Bentonville. He also is a firmwide resource and serves as concurring reviewer on some ofBKD's larger governmental engagements, including City and County of Denver, Colorado, Mississippi Department of Employment Services and Arkansas Development Finance Authority.

From December 2007 through January 2010, Andy participated in the governmental accounting standards-setting process as a Practice Fellow with the Governmental Accounting Standards Board (GASB) in Norwalk, Connecticut. During that time, he acted as a GASB project manager working on the Codification of Pre-November 30, 1989, Financial Accounting Standards Board Pronouncements project, GASB Statement No. 14, The Financial Reporting

Entity, Reexamination project, as well as the GASB Comprehensive Implementation Guide update. He also assisted the GASB technical research staff in responding to technical inquiries submitted by their constituency and performed several speaking engagements on behalf of GASB. He was a member of the GASB Comprehensive Implementation Guide Advisory Committee from 2012 to 2014.

He is a member of the American Institute ofCPAs, where he served on the State and Local Government Expert Panel from 2010 through 2013, and Arkansas Society of Certified Public Accountants. He serves on the board of directors as treasurer of Arkansas Literacy Councils, Inc. and has served as a local board member of the BKD Foundation. He also was named to the Arkansas Business "40 Under 40" list in 2015.

Andy is a 1996 graduate of University of Arkansas, Fayetteville, with a B.S. degree in business administration and accounting.

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Timothy J. Adler, CPA Partner Engagement Role: Concurring Reviewer

BKD

Tim is the accounting and auditing director for BKD's Houston, Texas, and Jackson, Mississippi, offices. He is responsible for the concurring review of audit, attestation, review and compilation engagements as well as providing technical support on accounting and auditing issues. He also provides audit and advisory services to financial institutions, not-for-profit organizations, employee benefit plans, commercial enterprises, health care providers and governmental entities. His experience includes agency audits under the Mississippi Accountability System for

Government Information and Collaboration (MAGIC). Tim serves on BKD's internal inspection teams and performs peer reviews of other CPA firms. He is qualified as an expert witness in the Chancery Court of Forrest County, Mississippi.

1 He has more than 25 years of experience in public accounting, corporate accounting and corporate finance. His financial institution experience includes external and internal audits of banks, credit unions, broker/dealers and mortgage companies. His not-for-profit experience includes foundations and trusts, social service, membership and religious organizations as well as federal Single Audits. His employee benefit plan experience includes 401(k), health and welfare, multiple employer welfare arrangements and defined benefit pension plans.

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Tim has served as an instructor for BKD and the American Institute of CPAs (AICPA) and an adjunct accounting professor at the University of Central Oklahoma. He is a member of AICPA and a licensed CPA in Texas, Mississippi and Oklahoma. He is active in several community organizations.

He is a graduate of University of Central Oklahoma, Edmond, with a B.S. degree in accounting and an M.B.A. degree.

Deborah E. Beams, CPA Director Engagement Role: Concurring Reviewer

Deborah, the current assistant accounting and auditing director for the firm's Dallas office, has more than 10 years of accounting and auditing experience working primarily in the not-for-profit and government industries. She also has extensive experience with Single Audits. Prior to her employment with BKD, Deborah was an auditor with an international firm. Her clients included public and private institutions of higher education, private schools, municipalities, religious organizations and health and welfare organizations. Her experience includes agency audits under

the Mississippi Accountability System for Government Information and Collaboration (MAGIC). She now serves as accounting and auditing assistant director for BKD's Dallas office, performing quality control reviews and assisting audit teams with technical matters.

She spent three years as a practice fellow at the Governmental Accounting Standards Board. During that time, she worked on projects leading to the issuance of GASB Statements on nonexchange financial guarantees, fair value and external investments pools. She also originated and led the GASB project on leases, which involved collaboration with Financial Accounting Standards Board staff and presentations to the Federal Accounting Standards Advisory Board.

Deborah is a member of the American Institute of CPAs and Texas Society of Certified Public Accountants.

She is a summa cum laude graduate of University of North Texas, Denton, with a B.S. degree as well as a 2005 graduate with an M.S. degree, where she was named Outstanding Masters Student.

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SERVICE DESCRIPTION

FINANCIAL STATEMENT AUDIT IN ACCORDANCE WITH GOVERNMENT AUDITING

STANDARDS & UNIFORM GUIDANCE

BK.D's audit approach focuses on areas of higher risk-the unique characteristics of Mississippi Department of Marine Resources' operating environment, the design effectiveness of your internal controls and your financial statement amounts and disclosures. The objective is to express an opinion on the conformity of your financial statements, in all material respects, with accounting principles generally accepted in the United States of America.

Our audit will be performed in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

These principles make up the foundation of BKD's audit approach:

•• The staff working on your engagement have been trained in the public sector. The Mississippi Department ofMarine Resources will not have to train our people on audit areas or risks specific to the industry.

•• We provide a high level of engagement executive involvement so you receive high-quality service with littleinterruption. We recognize we have to be flexible because not all audits go as planned. Because our partners andmanagers are in the field, we can adapt quickly to circumstances that arise.

•• Communicating the results of our audit procedures and sharing ideas to help accounting processes are integral partsof the engagement. ln addition, you will find communication does not end when the audit is completed. We strive

to keep in contact with management throughout the year. Continued communication means you can receive anefficient and effective audit.

Using our five-phase approach, we will work with you to develop an audit plan tailored to your specific circumstances and risks.

PHASE 1: PLANNING

BKD will work closely with the audil commillee and ma11ager11t:11l lea111 early during the audit, as required by auditing standards, giving the group an overview of the scope and timing. We ask that the audit committee and management team let us know about any risk issues, any areas where they would like us to perform additional procedures or anything else material to the audit.

During the planning phases of the audit, we will:

•• Review predecessor auditors' workpapers

•• Meet with management to examine changes that have occurred during the current year

•• Discuss expectations of the audit process and team members

•• Document and test internal controls

•• Perform a comparison of prior-year audited financial statements with current-year interim financial statements togain an understanding of the current-year activities

•• Read board of directors minutes to understand events occurring during the year

•• Obtain permanent file information, such as organizational charts, bylaws, debt and lease agreements

•• Design a timetable for the audit procedures that meets your reporting deadlines and is specifically tailored to yourentity's accounting process and transactions

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Materiality

BKD has a defined methodology for governmental clients that does not simply consider net income, but focuses on other metrics, such as total assets, total revenue or other meaningful metrics to scope our audit approach, to evaluate actual or potential errors and to develop audit samples. In addition, we will seek the input of the audit committee and management team to further direct our testing procedures prior to finalizing our scope.

PHASE 2: RISK ASSESSMENT

BKD will follow standards established by the Auditing Standards Board of the AlCPA. These auditing standards affect the amount and type of information BKD will gather to perform your audit.

We will:

�� Obtain an understanding of the business and business environment, significant risks Mississippi Depaiiment of Marine Resources faces and how those risks are mitigated. This will include examining how Mississippi Department of Marine Resources measures and manages financial performance, as well as internal controls over financial reporting.

�� Evaluate where the financial statements might be susceptible to material misstatement due to error or fraud.

�� Consider whether internal controls have been implemented and assess the general controls around 1T systems.

�� Assess risk of material misstatement for the most significant financial statement amounts and disclosures.

To help facilitate the testing of internal controls, we use questionnaires specific to the public sector, which expedite gathering your control information. Based on the documentation of controls, we will test the key controls of the organization.

We expect to interview Mississippi Department of Marine Resources personnel as part of our information-gathering process.

PHASE 3: FIELDWORK, TESTING & FURTHER AUDIT PROCEDURES

Based on our assessment of risks of material misstatements and determination of further audit procedures to be performed, we will design audit tests that take advantage of strengths in your internal control system.

During fieldwork, we will:

�� Perform substantive tests on material account balances

�� Evaluate significant unusual transactions

�� Ask management to further explore and clarify any identified potential misstatements

�� Evaluate the materiality of those misstatements, if applicable

�� Conclude whether all identified risks of material misstatement have been addressed

�� Test compliance with certain provisions of laws, regulations, contracts and grant agreements

�� Hold a formal exit conference with management to share findings and preliminary deliverables

BKD also will perform some tests from these alternatives:

�� Key item testing -Some items within an account may be large enough by themselves to involve significant risk of material misstatement. These key items can be audited individually.

�� Sampling-A detailed audit of representative individual items (a sample) selected from a population.

�� Analytical procedures -Taking a closer look at a grouping of information by examining it as it relates to other accounts, historical trends or other measures.

�� Computer-assisted auditing techniques (CAA T) -BKD uses ACL as one of the primary tools to apply CAA T. The use of ACL allows us to analyze data electronically, handle large amounts of data and increase the effectiveness and efficiency of audit procedures.

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As needed, our firmwide industry partners serve as technical resources with expertise to deal with particularly challenging or unique situations that may arise in the course of your audit.

We know a great deal of audit information often comes from third parties. Sometimes information from those parties is not received on time. To keep your report on schedule, we wi 11 keep you informed of the status of outstanding items.

PHASE 4: REPORT & COMMUNICATIONS DELIVERY

A cornerstone of the quality of our audits is the use of a concurring reviewer before the issuance of any reports. Another member of our assurance team, who bas otherwise not been involved in the engagement, reviews the financial statements and workpapers before issuing the report.

Generally accepted auditing standards establish requirements and provide guidance on our communication with those chargecl wilh governance. In addilion, if applicable, we will issue a report to management and those charged with governance of any sigr1ifo;anl deficie11cies or 111alerial weak1tesses idenli fied dming the audit.

Our commitment to a smooth engagement also includes the timely clelivery of our auclil reporl. A clrafl of L11e audil report, management letter and any other deliverables will be provided to you for your review and comments.

PHASE 5: PRESENTATION TO THOSE CHARGED WITH GOVERNANCE

You may want to formally share your audit results with your board of directors and audit wmmillee. We can help make a presentation to your board of directors and audit committee and answer their questions.

TIMING

We will coordinate the scheduling of your audit with you to both accommodate your schedule and lo allow fur Lbe timely completion of deliverables.

COMPLIANCE AUDIT IN ACCORDANCE WITH UNIFORM GUIDANCE (IF NECESSARY)

BKD performs hundreds of Single Audits annually, focusing on two objectives: first, an audit of your financial statements and reporting on the Schedule of Expenditures of Federal Awards (SEF A) in accordance with Government

Auditing Standards, and second, a compliance audit for federal awards expended during the fiscal year.

At least one-third of our not-for-profit and governmental clients receive federal fonding. Our extensive experience with compliance testing in accordance with the Office of Management and Budget (0MB) requirements can help provide Mississippi Department of Marine Resources with a Single Audit performed properly and submitted on time.

Our Uniform Guidance Audit Approach

During our audit procedures of federal award programs, we do not simply look for findings to report. We look for opportunities to advise you of more efficient ways to comply with federal regulations to reduce the risks of sanctions or reduced funding. BKD has developed contacts at federal agencies and has been able to work cooperatively with these agencies to help clients resolve or avoid issues.

Entities subject to the Uniform Guidance and Government Auditing Standards will benefit from BKD's specially designed audit programs, checklists and database of federal audit programs.

Identification and testing of your federal programs will be performed primarily during interim fieldwork, which will typically be performed before your fiscal year-end. We have found this to be the most efficient manner in which to perform our m1dit services when the additional Uniform Guidance requirements are present.

Training Requirements for Uniform Guidance Auditors

The Mississippi Department of Marine Resources can have confidence in BKD auditors' experience in testing federal funding subject to the Uniform Guidance. Our audit professionals are required to receive at least 120 hours of CPE every three years, and for auditors involved with audits performed under Government Auditing Standards, this education includes the hours required to comply with Government Auditing Standards Yellow Book guidance. Staff members attend a series of core audit and accounting courses over the first four years of their careers. Staff subsequently receive additional training on accounting and auditing for the not-for-profit and government environment.

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BKD PRIDE VALUES

WHAT'S IMPORTANT TO YOU?// A commitment to excellence? Independence and

objectivity? A broad skill set? Exceeding expectations? At BKD, these are all essential. That's

why every day you can see our partners and employees "living the PRIDE." These values-­

passion, respect , integrity, discipline and excellence-are the hallmarks of BKD and guide us

as we provide solutions for your business and financial needs. Experience what BKD PRIDE

values can mean for you.

PASSION

• For service to others • For making tomorrow better than today

Experience how our dedication and enthusiasm for making tomorrow better than today can

help you make informed decisions to help improve business and financial outcomes.

RESPECT

• For the differences that make our team strong • For our legacy and the benefits of change

Experience how our respect for diversity can provide a variety of skills and talents to meet

your needs. Respecting the lessons of our legacy and yours, we can help you capitalize on the

opportunities change inevitably offers.

INTEGRITY

• To do the right thing• To be objective and independent

Experience how our integrity and objectivity can help you make smart business decisions.

You want an advisor to tell you what you need to know, not just what you want to hear.

DISCIPLINE

• In process and innovation • To balance professional and personal commitments

Experience how our well-established protocols and low-risk approaches can help resolve issues

and advance your goals.

EXCELLENCE

• In skills and competencies• In our quest to be the best

Experience how our ambition, knowledge, commitment to lifelong learning and drive to

improve technical and analytical skills can work to consistently surpass your expectations.

BKD

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